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Weekly Insight and Features from AsiaMon, 02 Mar 2015 21:56:55 +0000en-UShourly1http://wordpress.org/?v=3.9.3Trade, Private Sector, Soft and Hard Infrastructure to Top Beijing APEC Agendahttp://asiafoundation.org/in-asia/2014/11/05/trade-private-sector-soft-and-hard-infrastructure-to-top-beijing-apec-agenda/
http://asiafoundation.org/in-asia/2014/11/05/trade-private-sector-soft-and-hard-infrastructure-to-top-beijing-apec-agenda/#commentsThu, 06 Nov 2014 00:49:01 +0000http://asiafoundation.org/in-asia/?p=19743By Katherine LohWednesday marked the first day of the week-long Asia-Pacific Economic Cooperation (APEC) Forum, hosted this year in Beijing. This year's summit, themed "Shaping the Future through Asia-Pacific Partnership," brings together ministerial leaders, CEOs of global corporations, and other leading voices in the private and public sectors to discuss the challenges facing Asian-Pacific economies. The week will culminate with the 22nd APEC Economic Leaders' Meeting on November 10-11. Heads of states from all 21 member economies, including U.S. President Obama, Chinese President Xi Jinping...]]>By Katherine Loh

Wednesday marked the first day of the week-long Asia-Pacific Economic Cooperation (APEC) Forum, hosted this year in Beijing. This year’s summit, themed “Shaping the Future through Asia-Pacific Partnership,” brings together ministerial leaders, CEOs of global corporations, and other leading voices in the private and public sectors to discuss the challenges facing Asian-Pacific economies.

Heads of states will convene in Beijing to talk about the regional economy, recent growth trends, and the role that regional partnerships play in supporting and propelling the Asia-Pacific region. Photo/Flickr user Trey Ratcliff http://bit.ly/1GqE9XR

The week will culminate with the 22nd APEC Economic Leaders’ Meeting on November 10-11. Heads of states from all 21 member economies, including U.S. President Obama, Chinese President Xi Jinping, Japanese Prime Minister Shinzo Abe, and Australian Prime Minister Tony Abbott will convene in China’s capital to talk about the regional economy, recent growth trends, and the role that regional partnerships play in supporting and propelling the Asia-Pacific region.

The three broad objectives of the Leaders’ Meetings are: (1) boosting Asia-Pacific economic integration, (2) exploring new sources of economic growth, and (3) strengthening regional connectivity. On the agenda will certainly be advancing talks on various trade deals in the region, such as the Trans-Pacific Partnership (TPP), which covers 12 Pacific Rim countries including the United States, but not China, and the Regional Comprehensive Economic Partnership (RCEP), which includes China, the 10 members of the Association of Southeast Asian Nations (ASEAN), plus Australia, India, Japan, New Zealand, and South Korea. The South China Morning Post reported last week that China would also attempt to “leverage its status as host of the summit” to push for a Pacific Rim-wide free-trade zone, known as the Free Trade Area of the Asia-Pacific (FTAAP), to be in place by 2025, though less certain is whether the gathered nations will have the taste for another layer of negotiations beyond the existing ones.

Within the framework of the summit, expect APEC leaders to also address the soft challenges facing the region’s private sector, such as upgrading its human capacity to meet the demands of an innovation-driven global economy, as well as improving the business climate, both at the national and sub-national levels. Presently, nine of APEC’s 21 member economies are classified as lower- or upper-middle income countries. While middle-income countries are critical drivers of the global economy, they are also subject to the risk of the “middle-income trap.” As my colleague, Véronique Salze-Lozac’h recently blogged, the middle-income trap is the risk that a country that has previously experienced rapid growth based on low-wage, unskilled labor, low-added value manufacturing, and heavy reliance on exports will stagnate at the middle-income level and fail to graduate to upper-income status. With that risk in mind, innovation, investment in technology and in higher education, and other strategies for moving up the value chain will certainly be a hot topic of discussion.

Leaders are also likely to discuss the region’s progress toward improvements within member economies’ “soft infrastructure,” including the business environment – a critical factor to growth. Just last month, APEC published an assessment of the region’s ease of doing business and how the region has improved in the last five years (from 2009-2013). While the report confirms that APEC economies have made continuous progress in some areas, particularly in starting a business and dealing with construction permits, other areas, such as access to credit and contract enforcement, have registered only modest or even negligible improvements. The report underscores the many areas where regulatory reform is needed to help remove obstacles to and lower the business costs for private sector constituents.

Perhaps the most titillating discussions to pay attention to will be those related to the third main pillar – strengthening regional connectivity through infrastructure development. On October 24, China led 20 other countries in signing a Memorandum of Understanding (MoU) to create a new international development bank, the Asian Infrastructure Investment Bank (AIIB). The U.S., Japan, Australia, and South Korea were conspicuously absent from the signing ceremony. Proposed a year ago by President Xi Jinping, the bank’s objective would be to offer financing for infrastructure projects in underdeveloped countries across Asia. While China insists that the AIIB would complement, rather than compete with, the mission of existing lending organizations like the U.S.-headquartered World Bank and Japan-dominated Asian Development Bank, many perceive this new bank as a way for China to bolster its influence in the region. The AIIB is not formally on this week’s agenda, says APEC Executive Director Alan Bollard, but it is no accident that the signing occurred just weeks before the Leaders’ Meeting. Regardless of whether and when the bank is discussed, infrastructure development and regional connectivity are urgent issues for APEC leaders to pursue during this week’s meetings.

APEC’s leaders have a packed agenda in addressing the challenges to ensure the region’s long-term prosperity. In the past several weeks, China has made herculean efforts in preparation for the meetings, including temporarily imposing tighter restrictions on vehicle usage and factory work in hopes of reducing smog levels. Among the numerous issues the organizers have highlighted on this year’s agenda, transitioning to a green, more sustainable economy seems to not have been shown the spotlight. It’s not that APEC does not acknowledge the urgency of addressing environmental challenges to economic growth – it convened a High-Level Roundtable on Green Development just this past May. But whether the leaders can manage a conversation on regional integration, innovation, infrastructure development, and sustainability at the same time, will be telling of member economies’ ability to do the same in the long run.

Katherine Loh is a senior program officer for The Asia Foundation’s Economic Development Programs in San Francisco. She can be reached at katherine.loh@asiafoundation.org. The views and opinions expressed here are those of the individual author and not necessarily those of The Asia Foundation.

]]>http://asiafoundation.org/in-asia/2014/11/05/trade-private-sector-soft-and-hard-infrastructure-to-top-beijing-apec-agenda/feed/0Inclusive Growth in Asia is Impossible Without Including Womenhttp://asiafoundation.org/in-asia/2014/03/05/inclusive-growth-in-asia-is-impossible-without-including-women/
http://asiafoundation.org/in-asia/2014/03/05/inclusive-growth-in-asia-is-impossible-without-including-women/#commentsThu, 06 Mar 2014 00:59:09 +0000http://asiafoundation.org/in-asia/?p=18415By Véronique Salze-Lozac'h and Ka Wai WongA report from Oxfam released in late January put down on paper what many already feared was true: almost almost half of the world's wealth is now owned by just one percent of the population. This is also the case in Asia, where income and wealth disparity is growing rapidly.]]>By Véronique Salze-Lozac'h and Ka Wai Wong

A report from Oxfam released in late January put down on paper what many already feared was true: almost half of the world’s wealth is now owned by just one percent of the population. This is also the case in Asia, where income and wealth disparity is growing rapidly. Many economists and politicians see this growing disparity as a constraint to further, sustainable economic development as well as a contributing factor to the recent social and political unrest across the region, including Thailand, Cambodia, and Bangladesh.

Research shows that greater gender equality and women’s access to education, employment, and business opportunities reduces the likelihood of household poverty. Photo/Karl Grobl

While Asia has experienced remarkable economic and social gains over the last few decades, with millions being lifted out of poverty, the Asia-Pacific region remains home to two-thirds of the world’s poor. Seven out of 10 people live in countries where economic inequality has increased in the last 30 years. Several of these countries are in Asia.

There is general recognition that economic growth in Asia must be more inclusive to further reduce poverty. But to get there, women must be able to achieve their full economic potential – as the United Nations estimates that the Asia-Pacific economy would grow by an additional $89 billion annually if this were the case. Without women’s participation in the economy, there will be no inclusive growth, and this inclusion cannot happen without the strong role of the private sector, particularly Asia’s small- and medium-sized enterprises (SMEs), which in middle-income countries like Malaysia, Philippines, Thailand, and Indonesia make up between 32-56 percent of the GDP and between 44-64 percent of female labor participation.

Gender equality can promote inclusive growth

Although economic growth does not necessarily promote gender equality, there is strong evidence that the reverse relationship is real. Gender equality and access to economic opportunities for women can promote economic growth and have positive distributional implications. Research shows that greater gender equality and women’s access to education, employment, and business opportunities reduces the likelihood of household poverty. According to UNESCAP estimates, gender discrimination in Asia costs up to $80 billion a year due to restriction on women’s labor market participation and lack of access to schooling.

Women as economic agents and entrepreneurs

The strong role of the private sector and the need for women to act as economic agents and entrepreneurs should not be underestimated. From successful women-run micro SMEs, entrepreneurs, and business leaders, to women workers and employees in sectors such as light manufacturing and garments, women represent a key factor in global economic growth. The World Bank estimates that output per worker would increase from 7-18 percent if women entrepreneurs and employees in the East Asia Pacific region worked in the same sectors as men and had similar access to resources.

In the case of SMEs, constraints faced by women and men are often similar: lack of transparent or stable business regulations and policies, burdensome administrative processes, limited access to finance, poor access to information and technology, and corruption. However, these constraints are even greater for women. For example, according to The Asia Foundation’s recent study that evaluated business environments in Malaysia, Philippines, Thailand, and Indonesia, women business owners were 12 percent less likely to be aware of new technologies that would help them, and 29 percent of women-owned export firms cited application paperwork as a challenge compared to 14 percent of men-owned firms.

The transformative potential of a gender-based inclusive growth strategy

The report identifies critical interventions that are needed to transform the gender-specific constraints that keep women out of the job market, trapped in poorly paid activities, or unable to start or develop their business. Creating a more enabling regulatory environment for both men and women requires action to address discriminatory legislation, such as property or inheritance laws, and new legislation that seeks to level the economic playing field for women and men, such as state support for maternity leave and child care and more gender-specific social protection policies. Enhancing women’s connectivity and capacity through mentoring, networking, and business associations will strengthen their voice in advancing their own needs, interests, and priorities and positively influence reforms and policies changes.

Few can argue Asia’s economic growth in the past decades has been anything short of impressive. Economic growth that has allowed countries in the region to reduce poverty, and for some countries, attain middle-income country status has placed the region as a global competitive force. But much remains to be achieved. The transformative potential of a gender-based, inclusive growth strategy remains to be fully realized. If Asia fails to recognize the need for inclusive growth, in particular increase access to opportunities for women-run SMEs, individual countries and the region as a whole will not live up to their full economic potential, resulting in unfulfilled promises.

Véronique Salze-Lozac’h is The Asia Foundation’s senior director for Economic Development Programs and Ka Wai Wong is the Foundation’s Australian Youth Ambassador for Development both based in Bangkok. They can be reached at veronique.salze-lozach@asiafoundation.org and ka.wong@asiafoundation.org, respectively. The views and opinions expressed here are those of the individual authors and not necessarily those of The Asia Foundation.

]]>http://asiafoundation.org/in-asia/2014/03/05/inclusive-growth-in-asia-is-impossible-without-including-women/feed/0Back from APEC, Pres. David Arnold Discusses Private Sector & Sustainable Developmenthttp://asiafoundation.org/in-asia/2013/10/16/back-from-apec-pres-david-arnold-discusses-private-sector-sustainable-development/
http://asiafoundation.org/in-asia/2013/10/16/back-from-apec-pres-david-arnold-discusses-private-sector-sustainable-development/#commentsWed, 16 Oct 2013 23:32:36 +0000http://asiafoundation.org/in-asia/?p=17369Last week, Asia Foundation President David Arnold joined over 1,200 CEOs and 10 heads of member economies at the annual APEC CEO Summit in Indonesia to discuss inclusive and sustainable development, with a special focus on the importance of women in Asia’s growth trajectory. In Asia editor Alma Freeman sat down with President Arnold just back from Bali to get his thoughts on the mood from Nusa Dua, the private sector’s role in driving Asia’s economic growth, and a new Asian approach to corporate social responsibility.

What were the biggest highlights and takeways from your meetings and conversations at the APEC CEO Summit?

It was my first opportunity to witness APEC in action. What was intriguing was the level of engagement and interaction between the political leaders and corporate and private sector leaders. The presentations that the various political leaders made were clearly reaching out to the private sector CEOs. This notion of seeing the private sector as partners in the region’s development is something that has come over time, particularly as Asian economies have become more open and connected, both with each other and the larger global economy.

Obviously there was a tremendous interest in a variety of new trade relations – the TPP was talked about frequently, but there was also interest in what can be done to further strengthen the existing connections through ASEAN and other channels to promote internal trade within and among countries.

There also seemed to be an urgency of trying to foster and promote inclusive growth, with increasing concern over widening income gaps and that the benefits of economic growth have not been spread as broadly as they should be. There are groups that are still marginalized, and are not part of the economic success story that is being written by the Asian economies.

The biggest takeway was probably that, while the U.S. is still a dominant player, both economically and strategically in the region, there was an increasing sense of the ability of Asian economies to chart their own course and a growing self-confidence and self-reliance on the part of these economies. While Asian growth rates are starting to slow, the fact is that the region has been pulling the global economy through a very difficult period of stagnation and recession; Asia has been the bright spot. That has led to a certain degree of confidence among the corporate executives and leaders in Asia in their ability to shape policies and pursue growth strategies that may be independent of Europe or the U.S. They want the U.S. at the table, but they aren’t going to sit back and wait for the U.S. to play a leadership role.

Taking a broad view of Asia’s uneven development, what do you see as the biggest challenges to Asia’s growth?

A critical piece of this equation is going to be about education. For the economies of the region to continue to grow at the high rates that the world and its people are hoping to see, there is going to have to be significant investment in human capital to sustain that growth.

Second, there seems to be clear recognition that the economic growth that many Asian nations have experienced has come at the expense of the environment, and there needs to be a greater understanding and enforcement of environmental standards and compliance. In many cases, there are laws in the books that protect the environment, but enforcement is low. Governments have a role to play in this, and there needs to be more effective environmental governance.

Unfortunately, governments and business leaders are not developing their green growth strategies to the extent that will be needed to deal with the magnitude of the problems that we are facing. Recent reports on environmental regulation and regional efforts in Southeast Asia don’t give a great sense of confidence that we’re getting to where we need to be. The continued reliance of India and China on coal as a major source of meeting future energy requirements is a cause for concern. Asia is going to be the hardest hit region by climate change, but is also the region that, in many ways, has the greatest potential to actually influence the trajectory of global climate change.

The third area that was highlighted at the Bali summit was on infrastructure and related issues of connectivity. The magnitude of infrastructure investment needed to sustain continued economic growth is staggering – some estimates are as high as $8 trillion – and there was considerable discussion of different services of financing, including public-private partnerships. China also used the occasion of the summit to announce the creation of a new Asian infrastructure investment bank, which would help finance needed infrastructure projects in developing Asian countries.

What role can the private sector play in tackling some of these issues?

There is a growing recognition on all sides that creating employment opportunities for an expanding youth bulge in many Asian countries is a growing challenge. The private sector is the engine for job creation and economic growth – no one was talking about any massive public sector schemes to create jobs or address the income gap. But, better training and educational opportunities that enable people to move into private sector jobs are essential. This falls partly within public sector responsibility, but the private sector also has a role to play in ensuring that the changing job market demands in these countries and the skill set of the workforce match.

There are also significant private sector opportunities related to so-called “green growth” strategies in Asia. It’s easy to see environmental protection as a challenge, but it’s also possible to view sustainable development as an opportunity. Some new, cleaner technologies have tremendous upside economic growth capabilities.

As the foreign aid landscape shifts, what unique role can corporations and businesses play in furthering the goals of inclusive, sustainable development?

There is growing commitment for corporate social responsibility programs in virtually all of the countries in the region. In some countries like India you have mandates that require a certain percentage of corporate income to be devoted to social responsibility programs. But even where you don’t have specific requirements, corporate social responsibility is very much a part of the conversation and thinking of most enlightened corporate leaders within the region.

At the same time, we are seeing that Asian corporations are not necessarily going to follow the same path as U.S. and Western companies. In many instances, Asia’s CSR programs will look and feel different than from what their U.S. counterparts are doing. It’s also an exciting time with the emergence of new Asian philanthropy in places like China and India, where you have industrial families and successful individuals who have accumulated new wealth and who are trying to find ways to develop their own approaches to philanthropy.

Let’s turn our focus for a moment to women as change agents in Asia’s growth trajectory. In your remarks at a sideline event about the Foundation’s new report findings on challenges that women SME owners face in four APEC economies, you emphasized that “this is not about providing privileges to women; it is about leveling the playing field to unleash their potential for the benefit of both companies and economies.” What were the reactions to the findings?

The need for governments to create an enabling environment for enterprises to grow by reducing some of the barriers is something that shows up in not just these studies around women SMEs but is a consistent theme in the Foundation’s work on economic governance. A lot of the challenges are related to licensing and access to information, things that are not terribly expensive for governments to do, but require a change of mindset and change of administrative process. The fact that that this set of issues bubbled up as high as it did at APEC is important.

The importance of networking and peer support mechanisms is also a critical takeway from the research. With the exception of Indonesia, the report shows that women business owners in Malaysia, Thailand, and the Philippines participate far less in business associations than their male counterparts. The social infrastructure around the development of women-owned business is a poorly understood but critical piece of the equation to create an environment that supports women’s economic empowerment.

The research also underscored the challenge that women owners face, particularly in fairly traditional Asian societies, with the expectation that they will continue to carry all of the burdens in their private capacity as mothers, as spouses, as family members, but on top of that, will be able to take on all of the burdens of managing and overseeing a small business. What they face is a double burden. In order for them to perform more effectively on the business side, social changes are also needed within which gender roles are shaped and determined.

As a leading international development organization, we are working with partners to foster long-term sustainable growth strategies that apply a gender lens to a variety of different sectors. These four country studies are very useful because it’s easy to talk globally about the economic importance of SMEs, but unless you understand the differential challenges between men and women you aren’t going to be able to design programs and policies that are effective. The commitment that we have to gender equality is not just a matter of social equity or fairness, it’s based on sound economic arguments, as well as best practice in the international development field.

]]>http://asiafoundation.org/in-asia/2013/10/16/back-from-apec-pres-david-arnold-discusses-private-sector-sustainable-development/feed/0Obama’s Asia Pivot on Shaky Groundhttp://asiafoundation.org/in-asia/2013/10/09/obamas-asia-pivot-on-shaky-ground/
http://asiafoundation.org/in-asia/2013/10/09/obamas-asia-pivot-on-shaky-ground/#commentsThu, 10 Oct 2013 00:01:16 +0000http://asiafoundation.org/in-asia/?p=17309By John J. BrandonAsia-Pacific leaders gather in Brunei this week for the 8th East Asia Summit (EAS) and the 23rd ASEAN Summit, on the heels of the Asia-Pacific Economic Cooperation summit in Bali on Monday. While a number of critical issues were set to be discussed, President Obama's last minute cancellation...]]>By John J. Brandon

Asia-Pacific leaders gather in Brunei this week for the 8th East Asia Summit (EAS) and the 23rd ASEAN Summit, on the heels of the Asia-Pacific Economic Cooperation summit in Bali on Monday. While a number of critical issues were set to be discussed, President Obama’s last minute cancellation of his entire Asia trip, skipping these meetings as well as two bilateral visits to Malaysia and the Philippines, has placed in doubt the U.S.’s ability to “rebalance” its Asia policy. The failure by the Congress and the president to come to a budget agreement to effectively address the nation’s debt ceiling has caused people all over the world, including Americans, to question the state of American governance. This comes at a time when China’s power and influence, for better or for worse, is rising.

President Obama had no choice but to remain in Washington until the budget crisis is resolved. While his trip to Asia would be in the U.S.’s longer-term interest and would reassure the Asia-Pacific community that the United States is still a viable world leader, such an act would have invited blistering criticism from the media and also from Republicans and a sizable number of Democrats.

Nonetheless, the inability of President Obama to attend the APEC and the EAS is a lost opportunity for his administration to solidify its commitment to Asia and leaves doubt in many Asians’ minds on whether the U.S. is able to serve as an effective counterbalance to China. President Obama was hoping to make progress in wrapping up the Trans-Pacific Partnership (TPP) by the end of the year. The TPP is a free trade agreement among 12 nations, and if ratified by the U.S. Congress would be the largest trade deal in history, valued at $28 trillion. President Obama has said that every extra $1 billion in exports would create 5,000 new American jobs. The President’s absence at APEC and the EAS does not promise the likelihood that an agreement by year’s end will be achieved.

China is wary that the TPP could be used to contain its burgeoning economic influence and is pursuing a rival trade deal, the Regional Cooperation Economic Partnership (RCEP), which includes all 10 ASEAN states and its FTA partners, Australia, China, India, Japan, New Zealand, and South Korea. Some ASEAN nations are concerned is that the TPP could be used to drive a wedge in ASEAN. The U.S. has countered with a program called the Enhanced Economic Engagement Initiative (or E3 Initiative), which is meant to lay the groundwork for ASEAN countries to adhere to the high standards found in the TPP. This begs the question whether the TPP and RCEP will compete or converge with one another?

China’s President Xi Jinping has pledged to increase China-ASEAN trade by two and a half-fold to $1 trillion within the next five years. China’s trade with ASEAN has grown from $8 billion in 1991 to $400 billion in 2012. U.S. trade has grown, but at a much slower rate, and consequently its share of East Asia trade has declined over the past decade from 19.5 percent to 9.5 percent, while China’s share has grown from 10 to 20 percent. Nonetheless, U.S. trade remains substantial at $200 billion, making ASEAN the U.S.’s 4th largest market for exports and 5th largest trading partner. U.S. ASEAN trade creates or supports 472,000 American jobs. In addition, U.S. foreign direct investment (FDI) in ASEAN represents by far the largest amount of FDI in Asia, amounting to $157 billion. Indeed, U.S. FDI in ASEAN is nearly three times larger than its FDI to China and 10 times more than to India.

President Xi’s call for an Asian Infrastructure Investment Bank will no doubt play a big part in discussions this week. There is good reason for this. Between now and 2030, The Asian Development Bank estimates that $8 trillion is needed for infrastructure development in Asia. This ties in closely with ASEAN’s desire to achieve connectivity ahead of the deadline for ASEAN economic integration by 2015. If successful, ASEAN will be much more attractive to large-scale investment than it would be as a collection of 10 small, segmented markets. It is in the United States’ interest to help foster ASEAN’s regional economic integration efforts.

Discussions at the East Asia Summit over maritime disputes in the South China Sea will also be important. China has disputes with four ASEAN nations – the Philippines, Vietnam, Malaysia, and Brunei. The U.S. has always been clear in its stance that it will not get involved nor take sides in territorial conflicts, but wants to see stability and freedom of navigation secured in the South China Sea. But the United States is urging all Southeast Asian nations, through ASEAN, to speak with one voice on maritime territorial conflicts and to work to the conclusion of a China-ASEAN Code of Conduct that would be legally binding. Leading up to the East Asia Summit, China has said discussion on maritime disputes in the South China Sea should be held “gradually.” This suggests that any agreement to these maritime disputes is still very far off in the making.

It is indeed unfortunate that President Obama cannot be in Southeast Asia this week to reassure leaders that the region remains integral to the U.S’s geo-political calculus and economic interests. Around the East Asia Summit in Brunei, President Obama was supposed to meet with all 10 ASEAN leaders for the first U.S.-ASEAN Summit. For the past four years, the president held a “meeting” with all 10 ASEAN officials. As part of the U.S. rebalancing strategy the U.S. decided last year to upgrade the leaders meeting to that of a “summit” in order to show the importance his administration is giving Southeast Asia. Perhaps one way President Obama could make up for his absence is to hold the U.S.-ASEAN Summit at a later date in the not-too-distant future, and invite all 10 ASEAN leaders to come to Washington (or elsewhere in the United States) to discuss how to strengthen mutual political, economic, and security interests. Such an overture by the president could help to persuade ASEAN leaders that the U.S. will continue to play an important, positive role in regional affairs as China rises and the broader Asia-Pacific region works to accommodate this rise and ensure peace, stability, and economic prosperity. This may at least dissipate, though probably not dispel, the notion in Southeast Asia that U.S. policy continues to remain episodic rather than consistent.

John J. Brandon is director of Regional Cooperation Programs for The Asia Foundation in Washington, D.C. He can be reached at jbrandon@asiafound-dc.org. The views and opinions expressed here are those of the individual author and not necessarily those of The Asia Foundation.

]]>http://asiafoundation.org/in-asia/2013/10/09/obamas-asia-pivot-on-shaky-ground/feed/0Women Biz Owners in Indonesia Defy Some Long-Entrenched Barriershttp://asiafoundation.org/in-asia/2013/09/04/women-biz-owners-in-indonesia-defy-some-long-entrenched-barriers/
http://asiafoundation.org/in-asia/2013/09/04/women-biz-owners-in-indonesia-defy-some-long-entrenched-barriers/#commentsThu, 05 Sep 2013 00:34:04 +0000http://asiafoundation.org/in-asia/?p=17125By Laura Seaman and Kate BollingerAt a time when analysts are monitoring Asia's economic performance as it emerges from the global financial crisis, a new study from The Asia Foundation looks at a particular limitation in many Asian economies, namely those factors that limit women-run businesses' ability to achieve their full growth potential. ]]>By Laura Seaman and Kate Bollinger

At a time when analysts are monitoring Asia’s economic performance as it emerges from the global financial crisis, a new study from The Asia Foundation looks at a particular limitation in many Asian economies, namely those factors that limit women-run businesses’ ability to achieve their full growth potential.

Small and medium enterprises (SMEs) serve as the backbone of developing Asian economies, comprising the majority of businesses in Asia, and women are key contributors to the SME workforce. In Indonesia, for example, SMEs employ more than 96 percent of the country’s workforce, and women make up about one-third of SME ownership, a figure growing 8 percent annually. These trends speak to the need to identify and address the barriers present in many Asian economies which disproportionately impact women-owned businesses and translate into a significant missed opportunity for economic growth. The United Nations estimates that Asia-Pacific economies could grow by an additional $89 billion per year if women realized their full economic potential, and that output per worker could rise 7-18 percent if business opportunities for women and men were equal.

The study, “Access to Trade and Growth of Women’s SMEs in APEC Developing Economies: Evaluating the Business Environment in Indonesia,” was released yesterday at a working group panel at the 2013 APEC meetings in Bali, and follows The Asia Foundation’s February 2013 report, sponsored by APEC, which explored factors limiting women’s entrepreneurship in Malaysia, the Philippines, and Thailand. The Indonesia research findings mirror many trends that emerged from the earlier study – emphasizing the consistency of barriers to women-run businesses across the region.

In particular, the research noted several specific areas where women-run businesses were disproportionately affected over men’s: finance, social factors, and business-related technologies.

Across the four economies surveyed, businesswomen reported high interest rates to be the primary challenge in the loan process. In Indonesia, this was cited by 34 percent of women respondents and 21 percent of male respondents. Interest rates are more likely to be perceived as high by smaller businesses. Because women-owned firms across the Asia-Pacific tend to be smaller, the perception of high rates is more common among women business owners. In addition, women owners across the board cited completing loan application paperwork and procuring supporting documentation to be a major challenge. The problem was especially pronounced in Malaysia, where roughly 28 percent more women business owners than men cited this as their primary challenge in the loan application process.

Women also noted specific social constraints related to running a business. There was a much higher likelihood that women entrepreneurs were responsible for primary childcare compared to their male counterparts, with the greatest gender disparity in Indonesia. Not surprisingly, the number of children a woman SME owner had was negatively correlated to her firm’s size, whereas the effect was actually the opposite for men.

The survey results also suggest that women are less active in business networks than men, in both formal business associations and informal networks. A notable exception was in Indonesia, where women SME owners are significantly more networked than their male counterparts, particularly in formal business associations. Across the board, women who participated in business associations tended to have larger firms and were more likely to say they planned to expand operations in the next three years.

While business-related technology use can have a positive impact on firm performance, these technologies were consistently under-utilized by women relative to men in Malaysia, the Philippines, and Thailand. Again, Indonesia was an outlier, with 74 percent of women reporting computer usage (compared to 60% of men), and 56 percent of women in Indonesia reporting that they were aware of technology that could make their businesses profitable (compared to 47% of men). Some of this disparity in awareness of and use of technology could be due, in part, to the large number of women-owned manufacturing firms surveyed in the Indonesia sample, as manufacturing is more high-tech than many other SME sectors.

In addition to areas where women faced special challenges, several factors seemed to present an equally significant barrier to both women’s and men’s firms. These include concerns over crime and physical safety, corruption of government officials, and trouble accessing business information like land titling and business licensing. The majority of women and men SME owners in all four economies reported these factors as being concerns.

There were also areas where interventions positively impacted women’s firms more than men’s. For example, having family members in business to serve as role models and mentors increased the likelihood that women would go into business themselves by 12 percent, whereas the effect for men was only 7 percent. Having a female relative in business had a particularly strong effect for women in Indonesia. Women owners in the four economies also reported participation in government-provided business services, like skills trainings and trade fairs, at higher rates than men owners. Further, highly statistically significant findings emerged demonstrating that women owners tend to hire more women than men owners. Women owners were also statistically more likely to have a higher percentage of women employees.

Findings in this research highlight a number of specific interventions that governments can take to support women in business. Improving access to business information through easily-accessible web sites and government officials can help streamline the process for women to start and grow their businesses. Further, governments can support business associations, including women’s business associations, to provide important training and services to women entrepreneurs related to technology, business and financial skills, employee hiring and management, business licensing and taxes, and green business training.

The private sector also has a key role to play in promoting women’s full participation in business. Partnering with governments through public-private dialogues on important issues like trade regulations, education, and business technology can highlight the specific concerns of businesswomen whose voices might otherwise not be heard in the public sphere. Sponsoring networking events and trade fairs which provide opportunities for businesswomen to interact with potential clients and suppliers would be particularly beneficial to business women. In addition, mentorship programs and exchanges would provide further important opportunities for learning and dialogue between women and men in the business community.

Through such concerted efforts, the constraints unique to businesswomen across the region can be addressed, resulting in greater and more inclusive economic growth.

Laura Seaman is a junior associate with The Asia Foundation’s Economic Development Programs in San Francisco and Kate Bollinger is a program officer for the Foundation’s Women’s Empowerment Program in Washington, D.C. They can be reached at laura.seaman@asiafoundation.org and kbollinger@asiafound-dc.org, respectively. The views and opinions expressed here are those of the individual authors and not those of The Asia Foundation.

]]>http://asiafoundation.org/in-asia/2013/09/04/women-biz-owners-in-indonesia-defy-some-long-entrenched-barriers/feed/0New Report Explores Challenges for Women’s Small Businesses in Indonesiahttp://asiafoundation.org/in-asia/2013/08/21/new-report-explores-challenges-for-womens-small-businesses-in-indonesia/
http://asiafoundation.org/in-asia/2013/08/21/new-report-explores-challenges-for-womens-small-businesses-in-indonesia/#commentsThu, 22 Aug 2013 00:55:20 +0000http://asiafoundation.org/in-asia/?p=17053By Laura SeamanIn early September, at the annual meetings of the Asia-Pacific Economic Cooperation (APEC) summit in Bali, Indonesia, The Asia Foundation will release a study examining how a variety of social, political, and economic factors influence women's capacity to engage in small and medium enterprise (SME) in Indonesia. ]]>By Laura Seaman

In early September, at the annual meetings of the Asia-Pacific Economic Cooperation (APEC) summit in Bali, Indonesia, The Asia Foundation will release a study examining how a variety of social, political, and economic factors influence women’s capacity to engage in small and medium enterprise (SME) in Indonesia. The report, “Access to Trade and Growth of Women’s SMEs in APEC Developing Economies: Evaluating the Business Environment in Indonesia,” follows a February 2013 study, sponsored by APEC, which examined similar factors in Malaysia, the Philippines, and Thailand. Together, the studies provide important insights into the institutional and cultural barriers that disproportionately affect women’s participation in business in these economies.

Women account for over half of the total population of Asia and are active participants in the workforce (including 51 percent in Indonesia), but face particular challenges to starting and growing SMEs. Photo/M.ANSHAR/SERAMBI INDONESIA DAILY

The Indonesia research, like the previous study, was undertaken in recognition of three main characteristics of economic growth in Asia. First, SMEs dominate the business landscape in Asian economies: they make up over 90 percent of all businesses, provide 60-80 percent of employment, and generate 30 percent of exports. Second, women account for over half of the total population of Asia and are active participants in the workforce (including 51 percent in Indonesia), but face particular challenges to starting and growing SMEs. Third, women’s full and equal economic participation is crucial to future growth. The United Nations estimates that Asia-Pacific economies could grow by an additional $89 billion per year if women realized their full economic potential, and that output per worker could rise 7-18 percent if business opportunities for women and men were equal. This much is clear: SMEs are essential drivers of Asian economies, and women are critical to SME growth in these countries. The study identifies the barriers that remain to women’s full participation in SMEs.

The research for the Indonesia study consisted of two parts: an extensive survey of 150 female and male SME owners, and qualitative research including interviews and focus group discussions. The survey controlled for firm-level factors like age, sector, and size, in order to single out the unique challenges that women-owned SMEs face in comparison to men-owned SMEs. Three broad categories of challenges were identified:

The report will be released during APEC’s 37th Small and Medium Enterprises Working Group (SMEWG) Meeting in Bali September 4-5. In partnership with the Chevron Corporation, The Asia Foundation will hold a panel to discuss issues and recommendations highlighted in the research. The panel will feature Asia Foundation experts, including Carol Yost, the Foundation’s senior director of the Women’s Empowerment Program, and its chief economist Véronique Salze-Lozac’h. They will be joined by four women entrepreneurs from each of the four APEC economies studied (Indonesia, Malaysia, the Philippines, and Thailand). The theme of the Bali panel underscores the priority APEC has placed on understanding and promoting women’s economic equality in Asia, at both the country and regional levels. Thus, the panel discussion will include recommendations for specific steps that governments and regional organizations can take to promote access to business opportunities for women.

Recognizing that the private sector plays an essential role in promoting women’s full economic participation in Asia, results of the research from all four countries will also be presented by Véronique Salze-Lozac’h at the CSR Asia Summit in Bangkok on September 17-18. Leaders from business, finance, government, and philanthropy will convene to identify more inclusive and accessible business strategies for Asia’s future growth.

The Asia Foundation’s research will help guide both public policy dialogue and private sector interventions, to maximize women’s impact on Asia’s economic growth and development. The full report will be available at asiafoundation.org.

Laura Seaman is a junior associate with The Asia Foundation’s Economic Development Programs in San Francisco. She can be reached at laura.seaman@asiafoundation.org. The views and opinions expressed here are those of the individual author and not those of The Asia Foundation.

]]>http://asiafoundation.org/in-asia/2013/08/21/new-report-explores-challenges-for-womens-small-businesses-in-indonesia/feed/0APEC 2011: Unleashing Women Entrepreneurship in Asiahttp://asiafoundation.org/in-asia/2011/09/14/apec-2011-unleashing-women-entrepreneurship-in-asia/
http://asiafoundation.org/in-asia/2011/09/14/apec-2011-unleashing-women-entrepreneurship-in-asia/#commentsThu, 15 Sep 2011 01:07:34 +0000http://asiafoundation.org/in-asia/?p=10904By Véronique Salze-Lozac'hAt the Asia-Pacific Economic Cooperation (APEC) forum taking place in San Francisco this week, the powerful role women entrepreneurs play across the globe in driving economic growth and job creation is high on the agenda. Recognizing this growing role, particularly for micro, small, and medium enterprises (MSMEs), I joined leading economists, experts, government officials, and women entrepreneurs from around the world today for a dedicated all-day discussion on specific constraints women face when starting or developing a business. ]]>By Véronique Salze-Lozac'h

At the Asia-Pacific Economic Cooperation (APEC) forum taking place in San Francisco this week, the powerful role women entrepreneurs play across the globe in driving economic growth and job creation is high on the agenda. Recognizing this growing role, particularly for micro, small, and medium enterprises (MSMEs), I joined leading economists, experts, government officials, and women entrepreneurs from around the world today for a dedicated all-day discussion on specific constraints women face when starting or developing a business. The stakes are high as these businesses are a major driver of economic growth and jobs – topics on everyone’s mind.

District Women's Business Forums, supported by The Asia Foundation, bring women entrepreneurs together to negotiate for better access to loans. In many cases, these networks have forced banks to change their policies toward women. With a new loan, executive committee member Rowson Arefin recently opened a beauty parlor in Bangladesh's Rajshahi City. Photo by Geoffrey Hiller.

This high-profile international event has brought together participants from very different cultural, social, and economic backgrounds as diverse as Japan, Vietnam, China, Indonesia, Malaysia, Thailand, and Singapore, to Peru, Chile, Australia, and the United States to share what they all have in common: the determination to reach their full potential as SME owners or managers and the feeling that this potential is still too often restricted by social, cultural, financial, legal, or administrative constraints across APEC economies.

In Asia, MSMEs are widely recognized as the engine of economic growth, generating employment and job opportunities in both rural and urban areas, and helping to alleviate poverty. In his paper on women entrepreneurship in Asia’s developing countries, Tulus Tambunan uses figures from the Secretariat of the Association of Southeast Asian Nations (ASEAN) to evaluate the proportion of small and medium enterprises (SMEs) with regard to the overall population of enterprises in selected Asian developing countries. The percentages range between 90 percent in Pakistan and India, to more than 99 percent in the APEC economies of Indonesia (99.9%), Thailand (99.8%), China (99.7%), and Malaysia (99.2%). Vietnam is a bit “behind,” with 96.8 percent of its enterprises being considered as SMEs. Whether they are entrepreneurs forced to work in an SME due to lack of other options, or entrepreneurs by choice, driven by the desire to succeed and to develop their businesses, women represent a growing portion of these SME owners.

All MSMEs owners (formal and informal, men and women) face a myriad of constraints, both internal (low technical, management, accounting knowledge) and external constraints linked to their environments (restricted access to credit, lack of market information, burdensome regulations, administrative procedures), but research and anecdotal evidence indicate that women are comparatively more often affected by these constraints than men and with higher intensity. Last year, the 2010 APEC Women’s Entrepreneurship Summit (WES) in Japan recognized that women-owned SMEs are often impacted differently by domestic barriers to doing business and face gender-specific obstacles that prevent them from capitalizing on the growth opportunities that should otherwise be available from increased trade in the region.

Apart from sociological and cultural barriers that often deny women the right to start their own businesses, women are often affected by unfriendly business environments. Even when the legal and administrative environment is not openly unequal, and policies not “officially” gender biased, informal constraints – such as how rules and regulations are implemented, difficulty accessing information, or the way women are considered, or not considered, by potential partners, buyers, officials, or bankers can be real impediments to their development and thus to the development of the whole economy. These challenges often work as a glass ceiling that affect women’s ability to start and grow their businesses.

Although such constraints vary from country to country, on top of social, cultural, and religious obstacles, women business owners typically suffer from low levels of education and limited access to training, which implies less understanding of technology and lower capacity to adapt to changing markets needed to be competitive. Women that we’ve met in various meetings facilitated by The Asia Foundation or by our partners often complain about the difficulty they encounter in accessing basic information on their legal, fiscal, and business environments, leaving them in a situation of uncertainty and increased vulnerability. Women-owned businesses also regularly lack access to land and property, restricting their capacity to access capital and credit and thus their capacity to seize business opportunities. As many women generally lack exposure to national and international markets, exacerbated in some countries by limited mobility, low personal security, and high risk of sexual harassment, they are too often unable to develop marketing opportunities for their products or to engage in valuable business partnerships.

Improved, more gender-balanced business environments are essential for economies to benefit from the full potential of women as entrepreneurs. The World Bank’s 2010 report, “Economic Opportunities for Women in East Asia and the Pacific,” shows that in economies where it is easier to do business, there are more women entrepreneurs and higher levels of women in the workforce. Constraints that hurt women’s economic potential need to be addressed by governments, civil society, and by the business women themselves. To play this role, women entrepreneurs need the chance to raise their voice in order to fully engage in the policy-making process that shapes business environments.

For both men and women, access to information is one pillar to achieving such free entrepreneurship. Women, as well as men, will be more apt to seize business opportunities and become more competitive if they operate in a more transparent business environment and have more open access to information regarding their regulatory, legal, financial, market, or technological environment. Moreover, additional research is needed to better understand women entrepreneurs’ business environments and how a gender-sensitive approach in business environments can improve the efficiency of structural and regulatory reforms. Increased knowledge of the factors affecting access to trade and growth of women-owned SMEs in APEC developing economies would help governments take actions and tap into this reservoir of growth.

Yet, access to information is often more difficult for women because they are generally less involved in social interaction and less likely than men to be members of business associations, Chamber of Commerce, or other types of networks. Most business associations in Asia have few women members, and rarely have women represented at the leadership level. By increasing their participation in such places where business issues are discussed, women entrepreneurs could increase their knowledge of the business environment, connect with potential clients or partners, develop their bargaining power, and raise their visibility as full economic actors.

Lack of participation of business women in professional associations and social networks also means that their specific needs and demands are rarely taken into account in the lobbying and policy-making process. Most business women have no access to policymakers, executive bodies, or the bureaucracy. If they want to have a chance to raise their concerns and help shape a business environment that will be more responsive to their needs, women entrepreneurs have to be more engaged in policy advocacy, through women business associations but also by becoming more influential in the mainstream policy process. Through a series of Public-Private Dialogues, where local entrepreneurs discuss business constraints with local and national authorities, The Asia Foundation has expanded opportunities for women entrepreneurs to raise their concerns. In Bangladesh, for example, a group of business women participating in a meeting with other business men and high-level public officials, took this opportunity to bring their difficulties in accessing credit to the attention of the mayor. Strengthened with this political support, they were then able to negotiate simplified procedures, lower interest rates, and improved access to credit with banks. A few months later, more than 14 women had received loans to develop their business.

The focus on women entrepreneurs at APEC this week is a much welcomed recognition by the member economies of the key role women play in promoting APEC’s own objectives of raising living standards through increased trade and sustainable economic growth and fostering a sense of community among Asia-Pacific countries.

Véronique Salze-Lozac’h is The Asia Foundation’s director for Economic Development Programs. She can be reached at VSalze-Lozach@asiafound.org. The views and opinions expressed here are those of the individual author and not those of The Asia Foundation.